UN Treaty negotiations kick off amid major global uncertainties
October 27th, 2020
The 6th session of the negotiations of the Open-ended Intergovernmental Working Group (OEIGWG) for the elaboration of an International Legally Binding Instrument on Transnational Corporations and other Business Enterprises with respect to human rights began on Monday, 26 October 2020, at the UN in Geneva amid major global uncertainties.

Despite restrictions on travel and large gatherings, more than 30 member states participated in person, while a large number of civil society organisations (CSOs), trade unions and other stakeholders joined the discussions virtually.

COVID-19: Time to better regulate supply chains

The first day began with opening statements by member states, the UN High Commissioner for Human Rights, Michelle Bachelet, Ecuador’s Minister of Foreign Affairs and Human Mobility, Luis Gallegos, and the Chairperson Rapporteur, Emilio Izquierdo, who addressed how the COVID-19 crisis requires states to better regulate supply chains to protect human rights and the environment and to strengthen the sustainability of businesses operating on a planet with finite resources. “The current crisis is an unparalleled opportunity for all countries to leverage their socio-economic recovery towards leaving no one behind,” Gallegos urged.

An opportunity to improve accountability

The High Commissioner acknowledged the complexities of the treaty process, and the need for complementary initiatives at regional and national levels. She encouraged all stakeholders to engage constructively and promote “principled, responsible and accountable business operations”. Chair Rapporteur Izquierdo reminded the delegates that the Treaty is an opportunity to improve accountability and access to effective remedy for victims of corporate abuse.

The revised draft of the Treaty builds upon oral statements and written inputs from the 5th negotiating session, written submissions put forward in February, as well as two informal consultations which took place in May and June of this year. Most state delegates and accredited organisations recognised that the new draft is better aligned with the UN Guiding Principles (UN GPs). However, issues like scope, direct obligations for businesses and extraterritorial jurisdiction proved contentious.

EU and China agree on something

Various states, such as Cuba, the Philippines, Pakistan, Venezuela, Mozambique and Egypt, spoke in support of the legally binding process, but urged states to exercise caution and not exceed the scope of “elaborating an international legally binding instrument on transnational corporations and other business enterprises,” as mandated by resolution 26/9. The EU and China seemed to agree on one thing: the text does not provide an appropriate legal basis for negotiations and criticised the lack of participation by industrialised nations. Armenia and Ethiopia supported China’s statement, claiming that the overly detailed coverage of human and environmental rights puts the right to development at risk. The UK was the only state to echo the position of the International Chamber of Commerce and the International Organisation of Employers by calling the scope of the draft “too vague to be workable” and the draft text “inconsistent with principles of international law”, without providing further explanation.

The participation of the EU as a bloc was unsurprisingly disappointing. Even after six years, the EU still does not have a negotiating mandate, even though the revised text addresses most of the EU’s previously raised concerns. Moreover, its representative, Guus Houttuin, highlighted the remaining shortcomings of the treaty text, notably the ambiguity of UNGPs and other relevant instruments; unclear elements like scope, civil and criminal liability; as well as applicable law and judicial cooperation. The EU delegate also spoke about the Commission’s expected introduction of mandatory human rights and environmental due diligence obligations for EU companies in 2021, but noted that the EU’s participation will, once again, be limited to clarifying questions, given the lack of formal mandate.

In stark contrast, Egypt and Senegal were supportive of the treaty process, but urged states to “move beyond hiding behind the UN GPs,” as the treaty process is complementary and advances the UNGPs. Many states (Brazil, Namibia, Iran, Russia, Mozambique, Panama, Mexico, Philippines, Ecuador, Armenia, Ethiopia, Holy See and Palestine) engaged with the text with specific proposals for changes.

From 2017 UN Binding Treaty negotiations.

Inputs on the Preamble

UN member states and the Holy See proposed a variety of changes to the preamble, from adding a reference to Agenda 2030 to introducing a recognition of age and gender dimensions to highlighting the link between public health and corporate accountability. Another suggestion made was to list International Labour Organization conventions, the Convention on the Rights of the Child and its optional protocols, the UN Framework Convention on Climate Change and other relevant international and regional environmental agreements in the preamble of the Treaty text. However, what remains unclear are references to humanitarian law, as well as the inclusion of rights not yet enshrined in international law.

Changes to article 1 on definitions

States squabbled over the wording of the first article. China, Ethiopia and Namibia attempted to weaken it, however, the most forceful attempt to undermine it came from Brazil. The country’s delegate argued that the term contractual relationship should not be replaced by business relationship. This would maintain a legal loophole for companies to engage with entities in their supply chains without a contract to avoid having a direct link. Other states, such as Mozambique, expressed their support for this amendment, which was also welcomed by civil society.

Moreover, there was no clear consensus on what constitutes business activities. Namibia joined Ethiopia and China in arguing that state-owned enterprises should not be included because they are already regulated by domestic law, while the Russian Federation submitted that individuals need to be explicitly excluded from the definition.

On a more constructive note, the Philippines suggested that transnational corporations (TNCs) should be defined as, “any enterprise that undertakes foreign direct investment, controls assets in more than one country or produces goods in more than the country of origin.” Another gap in the current language is whether services that are traded globally are also covered by the Treaty.

The definition of victim in the draft text attracted many comments and questions. One proposal suggested replacing or deleting ’emotional suffering’ from the definition as it overlaps with ‘mental injury’. Another suggestion made was to include persons who have suffered prejudice, economic loss or emerging harm irrespective of nationality or place of domicile.

On the issue of human rights abuses, some states took issue with the broad definition, while others criticised that it fails to consider different degrees of seriousness of harm.

The lack of internationally recognised definition of environmental rights raised concerns among delegates.

Changes to article 2 on statement of purpose

States submitted two amendments to the wording of the second article of the draft Treaty. Firstly, to use TNCs instead of business activities, and secondly, to refer to both human rights abuses and violations throughout the text.

The week ahead promises rich discussions. In the words of Minister Gallegos, “In the long-term it is much better to participate in the debate than to deny it or to be indifferent to it.”

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